Australia's Energy Minister, Chris Bowen, announced on Thursday an increased commitment to fund new wind, solar, and battery projects, aiming to attract investments that will enhance the stability of the energy grid as coal-fired plants phase out.
While the specific financial details of the program were not disclosed, Bowen emphasized its goal of driving investments in 32 gigawatts (GW) of new capacity, approximately half of the national electricity market's existing capacity.
The initiative responds to challenges within the industry, struggling to meet the government's target of achieving 82% renewable power by 2030, compared to the current 40%. The hurdles primarily stem from difficulties in expanding transmission networks to accommodate new renewable projects located farther from demand centers.
“We're doing well, but not well enough; we need to do better to reach that target,” stated Bowen during an interview with ABC television.
The program, to be administered through auctions, builds upon a scheme established by the Labor government in December 2022 in collaboration with states. The initial scheme aimed to stimulate investments of at least A$10 billion ($6.5 billion) in renewable projects.
Acknowledging global competition for capital and supply chain elements in the renewable sector, Bowen emphasized the need to remain competitive. The government intends to conduct tenders for the capacity, establishing floor and ceiling revenue for the projects. If project revenue falls below the floor, the government will compensate the difference, while excess profits above the ceiling will be shared with the government.
“We want to ensure that the taxpayer gets the best value for money, so we're not going to signal to the bidders, and we want them to have their pencils really sharp and put in really sharp bids,” explained Bowen.
